A conversation about bitcoin and tether
What's up my faithful readers,
I am back from a few day hiatus. They are infrequent so don't get used to them :)
I have a few things I want to talk with you about. As you can see from the chart, on Bitfinex, the price reached around $7,700. It was at a $1,000 premium compared to other exchanges. As this was happened, the price of Tether fell drastically to $ .85 on Kraken. Why is this?
Well, Tether fell simply due to people speculating that it is not actually a dollar-backed currency. This is very likely - I would never recommend using an exchange that has tether, but not any fiats. That said, those exchanges exist and so what happens when you are afraid Tether's value will drop but you can't convert to fiat? You convert to Bitcoin. This is why a drop in Tether causes the price of bitcoin to rise. Every time you make a purchase, you are selling something. When you buy a sandwich, you are selling the baker fiat. When you go to work, you sell your time to buy dollars. You are a buyer AND a seller in EVERY transaction you ever make.
The same logic that applies to potential insolvency in Tether applies to exchanges. If people fear exchanges are insolvent, they will buy coins and get them the hell off of the exchange, thereby pumping the price. With this said, I want to make a recommendation to you: do not keep more than you are willing to lose on an exchange. If any of you reading this are successful traders wanting to take your game to the next level, I'll make that same recommendation in a different form: lock in some of your profits and keep them safe in storage where YOU control YOUR keys on a regular basis.
The last thing I want to say is that I will not be using Bitfinex for charting anymore as it is crazy and does not accurately reflect the market at the moment. I would recommend you use charting from a different data point as well.
Hope you learned something.
-YoungShkreli
I am back from a few day hiatus. They are infrequent so don't get used to them :)
I have a few things I want to talk with you about. As you can see from the chart, on Bitfinex, the price reached around $7,700. It was at a $1,000 premium compared to other exchanges. As this was happened, the price of Tether fell drastically to $ .85 on Kraken. Why is this?
Well, Tether fell simply due to people speculating that it is not actually a dollar-backed currency. This is very likely - I would never recommend using an exchange that has tether, but not any fiats. That said, those exchanges exist and so what happens when you are afraid Tether's value will drop but you can't convert to fiat? You convert to Bitcoin. This is why a drop in Tether causes the price of bitcoin to rise. Every time you make a purchase, you are selling something. When you buy a sandwich, you are selling the baker fiat. When you go to work, you sell your time to buy dollars. You are a buyer AND a seller in EVERY transaction you ever make.
The same logic that applies to potential insolvency in Tether applies to exchanges. If people fear exchanges are insolvent, they will buy coins and get them the hell off of the exchange, thereby pumping the price. With this said, I want to make a recommendation to you: do not keep more than you are willing to lose on an exchange. If any of you reading this are successful traders wanting to take your game to the next level, I'll make that same recommendation in a different form: lock in some of your profits and keep them safe in storage where YOU control YOUR keys on a regular basis.
The last thing I want to say is that I will not be using Bitfinex for charting anymore as it is crazy and does not accurately reflect the market at the moment. I would recommend you use charting from a different data point as well.
Hope you learned something.
-YoungShkreli
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